Monday, 28 November 2016

Affordable Housing - think leasehold & CLRI

Letter to Byron Shire ECHO 27 Oct 2016

The pathway to affordable housing is well lit by the CLRI – the Canberra Land Rent Initiative. In the ACT, house blocks are offered on the basis of freehold ownership or leasehold; the former requires a big capital commitment, the latter simply the ability to pay the ground rent. The CLRI enables would-be residents meeting specific requirements to pay a ground rent of just 2% of valuation.  See This is a truly practical way of helping folk build a home – not just ‘get into the housing market’ – for the experience in Canberra is that a good number of the ‘two-percenters’ and other leaseholders, once they get themselves established in life, convert to the freehold option for financial and security reasons.

This scheme is possible because the ACT owns the land. So, if we are serious about affordable housing, we need to focus on replicating the CLRI and leasehold offerings in regions where the potential residential land is privately owned. The key is to place conditions on the land at the time of ‘change of use’ being granted that requires a good proportion of blocks to be made available to owner-occupiers as leasehold on well-defined terms.

Such conditions will reduce the size of the windfall that does accrue to the land owner on change of use; as this monetary gain is entirely the gift of the community, there are very good reasons for the community to hang on to part of the gift for social benefit. This is not ‘value capture’ as admired by Baird and Turnbull but ‘value retention’!  Why give it away, when we could make good use of it building social capital. This way, no one is subsidizing the pathway to affordable homes, just the land-owner is not getting as big a windfall as otherwise.

There are many obstacles along this route but they are worthy of detailed study to surmount them. A lot of attention is given to minute houses and land supply; the former are ‘interesting’ and the latter is well controlled by the ‘real estate’ industry to limit risk and maximise return. In truth, affordable housing is almost entirely about affordable access to land.

No comments:

Post a Comment